CMC Markets Reports Weak H1 of 2019, Weighed Down by ESMA

CMC Markets Plc has published its interim financial results for the first half of its 2019 fiscal year, which spans from April 2018 until March 2019. The results, which were made available through the London Stock Exchange, show a sluggish performance, weighed down by recent regulatory changes.

For the six months ended September 30, 2018, net operating income was £70.6 million. This is a drop of 21 percent when compared to the same period of the firm’s 2018 fiscal year, which had a net operating income of £89.6 million.

According to the statement from CMC Markets, the second quarter of the company’s fiscal year was strongly impacted by two main factors. The first of these was a sustained period of low market Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term. The second issue was Retail Trading Retail Trading In finance, retail trading refers to individual traders, trading through a broker, or on a platform. This can include novice traders and experienced traders. Trading and investing are divided into two categories, retail and institutional. Institutions include investment banks like JP Morgan or Citibank and global central banks like the US Federal Reserve and the European Central Bank. When we talk about retail trading however, we usually are referring to forex trading, but there are retail trade In finance, retail trading refers to individual traders, trading through a broker, or on a platform. This can include novice traders and experienced traders. Trading and investing are divided into two categories, retail and institutional. Institutions include investment banks like JP Morgan or Citibank and global central banks like the US Federal Reserve and the European Central Bank. When we talk about retail trading however, we usually are referring to forex trading, but there are retail trade Read this Term activity being affected by the implementation of ESMA regulations for the last two months of the quarter.

While operating income was down, operating expenses were up year-on-year, increasing by 6 percent from £59.3 million in the first half of 2018 to £62.7 million. This uptick was largely due to investments in its stockbroking business and higher fixed salary costs across CMC Markets.

Profit before tax was also down by 76 percent year-on-year, falling to £7.2 million. According to the report, performance is expected to be weighted towards the second half and will be supported by extra stockbroking revenue.

Trading on CMC Markets Increased YoY

Commenting on the results, Peter Cruddas, Chief Executive Officer, said: "whilst trading in the first quarter outperformed the same period last year, as previously announced, the second quarter was particularly difficult.

“Volatility was low, and unusually the majority of asset classes traded in tight ranges. This was further compounded by the impact of European regulatory change that came into force on 1st August. As a result, overall profit after tax was significantly lower than the same period last year.”

Despite ESMA’s regulations coming into effect during the second quarter, the number of trades during the first half of CMC Market’s 2019 fiscal year was up by 14 percent, increasing from 30.7 million trading in H1 of 2018, to 34.9 million in H1 of 2019. The value of trades was also up year-on-year, however, only by four percent.

“As we enter the second half, which is typically stronger than the first, we have seen an improvement in market conditions and encouragingly an increase in activity across retail, professional and institutional client categories," Cruddas added.